Appeal from United States Board of Tax Appeals.
Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
The question presented is whether petitioner is entitled to a deduction of $31,058.54 from the 1920 income on account of a loss sustained within that year due to the voluntary removal or demolition of its building incident to remodeling such property.
The statutes and Treasury regulations relative which are involved in this question are as follows:
Revenue Act of 1918, c. 18, 40 Stat. 1057, 1077, 1080, 1069:
"Sec. 234. (a) That in computing the net income of a corporation subject to the tax imposed by section 230 there shall be allowed as deductions: * * *
"(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise; * * *"
"Sec. 235. That in computing net income no deduction shall in any case be allowed in respect of any of the items specified in section 215."
"Sec. 215. That in computing net income no deduction shall in any case be allowed in respect of -- * * *
"(B) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate. * * *"
Regulation 45, Treasury Department (1920):
"Art. 142. * * * When a taxpayer buys real estate upon which is located a building which he proceeds to raze with a view to erecting thereon another building, it will be considered that the taxpayer has sustained no deductible loss by reason of the demolition of the building, and no deductible expense on account of the cost of such removal, the value of the real estate, exclusive of old improvements, being presumably equal to the purchase price of the land and building plus the cost of removing the useless building."
The Treasury regulation has the force and effect of law unless it is in conflict with express statutory provision. Maryland Casualty Co. v. United States, 251 ...